ABS prices firm up in China on bullish run in feedstock markets

ABS prices have been firm in China for the last couple of weeks owing to rallying butadiene and acrylonitrile (ACN) costs in Asia, as per ChemOrbis. Sellers in the import and local markets held their offers steady or issued price hikes especially in cases of limited stocks or increased supply from their suppliers, although firm levels have yet to generate greater demand due to the year-end season. Many players attributed firm prices to rising upstream costs in the region since November. Spot butadiene prices skyrocketed to reach around US$2400/ton FOB Korea, indicating a cumulative increase of US$400/ton since late November due to tight supply stemming from shutdowns at some crackers. Chinese buyers were active in securing some spot cargoes prior to the Lunar New Year holiday leading to an increase in demand. Spot ACN prices also rose gradually due to restricted availability and healthy demand on re-stocking activities. ACN prices have risen by around US$65/ton since late last month. The overall import ABS range in China represents a US$90/ton increase on the low end. With respect to late November, the range moved up by US$40/ton on the low end and by US$10/ton on the high end. A South Korean producer maintained offers this week and plans to follow a steady pricing policy in the short term. He noted that they have limited quotas and are not in a hurry to sell aggressively at the year end. However, he admitted that they are facing difficulties while achieving sales at their current offers, as per ChemOrbis. A trader offered flat offers on the week to ensure their smooth sales amidst discouraging downstream demand this month. “We are planning to hold low inventory levels and observe the market before taking a position,” he mentioned. Looking at the local market, the overall ABS price range indicates a CNY50/ton (US$8/ton) rise on the low end, while the high end is down CNY100/ton (US$16/ton) on the week. When compared to late last month, the level represents CNY50-100/ton (US$8-16/ton) increases. A distributor raised his ABS offers by around CNY100-200/ton (US$16-31/ton) following his producer’s hike on firmer upstream costs. He expects the market to hover around current levels this week due to lack of support from weak demand. Another distributor elected to give flat prices after increasing them at the beginning of the week as his sales slowed sharply. He plans to keep his inventories at low levels and to replace his stocks with small purchases over the short term. Now that the Chinese market is under the opposite pressures of high costs and lack of supportive demand, both import and local ABS prices are expected to follow mostly a steady to firm trend in the near term. In tandem with the general trend in China, players in Southeast Asia also reported steady to firm price levels this week. A trader in the region reported that he raised his offers by US$30/ton to Malaysia, Indonesia, Philippines, Vietnam and Thailand this week following the price hike from his supplier.